Obama, Congress Still Miles Apart on U.S. Budget

Washington's fight over taxes, entitlements and spending cuts will spill into another year.

There's little chance that Congress will send President Obama a budget to sign in April. Lawmakers have already locked in their paychecks, though, despite the crowing over a new law that claims "no budget, no pay" for members of the House and Senate.

Turns out, the law that requires Congress to pass a budget by April 15 or forfeit their pay doesn't do what its supporters said it would do. Yes, the measure requires lawmakers to pass a budget bill by then, but the two chambers don't have to pass the same bill, and it doesn't have to be signed into law.

Since the House and Senate passed separate budget bills last week, they've already met the supposedly onerous requirements of the pay law, even though the likelihood of having a budget in place is something close to zero. There are just too many differences between the two bills to find common ground in a few short weeks.

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The Republican-controlled House's bill, crafted by Budget Committee Chairman Paul Ryan (R-WI), is designed to balance the federal budget in 10 years through deep spending cuts and reforms to Medicare and Medicaid. The Democratic-led Senate's version, steered by Budget Committee Chairman Patty Murray (D-WA), calls for about $1 trillion in new tax revenues.

Each bill will die in the other chamber. Senate Democrats won't swallow deep cuts in government spending or put entitlement programs on the table without any offsetting revenue, and House Republicans will balk at tax increases.

President Obama will introduce his budget blueprint in early April, but don't expect a compromise measure that borrows from the Ryan and Murray plans. The president's offering will be just as partisan as the other two. And, just like the House and Senate versions, Obama's budget will be declared dead on arrival.

After the artificial April 15 deadline passes, a budget deal likely will remain out of reach. It's a matter of timing. If a budget accord isn't reached by August, it's probably not going to happen. With Congress away for much of August and the fiscal year starting on October 1, lawmakers will instead resort to a continuing resolution to keep the government running for a few months.

By the time that temporary measure winds down, representatives and senators will be knee-deep in political fund-raising for the 2014 elections, and that will end any chance of a big budget bargain. Tax increases and changes to Medicaid and Social Security are poison pills at election time. So more short-term funding resolutions will be in store, just as they have been in recent years.

But one good thing did come about because of the no-budget-no-pay bill: The Senate passed a budget bill for the first time since April 2009. So all was not lost, although nothing substantial was gained.

Except for the passage of a Senate spending bill, the budget process for fiscal 2014 will look a lot like every other budget process so far in the Obama era, and the government will limp along from one short-term funding measure to the next.

Kenneth R. Bazinet
Associate Editor, The Kiplinger Letter